Millennial’s, Renters, and First Time Home Buyers

For the first time in many years, Home Buying is the number one goal for many Americans under the age of 34. According to the National Association of Realtors, millennials made up 35 percent of all buyers in 2015. This is a significant trend, and one that could be affected by the fact that many of these first time home buyers also carry student loan debt.

In fact, many economists are only now understanding that student loan debt may be the biggest problem facing this group, as they are successful in finding jobs. During the great Recession, many Millennial first time home buyers opted to obtain advanced degrees, as there were few jobs for them available. As a result, millennials are now facing more than an average of $37,000 each in student loan debt.

Can you buy a house with Student Loan Debt?

Of course each person is different, however, there are still programs available in NC to help folks that want to buy a house and keep their student loans in an IBR status. With many of the mortgage loan programs available for first time home buyers who need down payment assistance, we have to count 1% of the balance in the DTI ratios to qualify.

For Veterans, we can count whatever is on the credit report, even if the payments are in deferment. Loans in deferment, for all other types of mortgages, must come out – and have a payment assigned. If you have 5% for your down payment (even if it’s a gift) then you might want to explore the Freddie Mac mortgage program. They will allow us to use ANY payment, as long as it is reported to the credit bureau.

With Down Payment Assistance programs, and USDA No down payment loans, the payments must be fixed rate payments. IMHO, this is one of the reasons we should be watching the Presidential Elections with some interest. If a candidate, or a party, can make changes to Student Loan debt to make it more affordable – or they will make some changes to FHA (for instance) so that first time home buyers who have payments in a deferred status can purchase a home – the Economy will thrive.

These cities are most in demand by millennial job seekers according to LinkedIn Austin, TX is the city most in demand by millennial job seekers according to analysis by LinkedIn. The data, mined from job searches on the site, shows that midsize cities have seen 25 per cent more interest from millennials than large cities.

LinkedIn data shows that while these are the cities seeing strength for job searches, millennials are not yet moving there. Seattle, Portland and Denver have shown the largest rises in millennial users on the platform.

How many Millennials are there?

75 Million from the age of 18 to 34 in 2015!

74% of all Millennial Renters say they are likely to buy a home in the future.

One in three workers in the workforce are now Millennial’s!

Millennial’s have surpassed Gen X in the workforce, and are the largest segment of the work force – 53.5 Million.

What is holding back the Millennial from purchasing a home

74% of renters say they are afraid they won’t qualify so they don’t even try!

First Time Home Buyers:

54% of first time home buyers are married

18% are single females

11% are single males

15% are unmarried couples

85% of non-homeowners ages 18 to 34 say they aspire to own a home

25% of Millennial’s buy a home together before getting married

57% of Millennial’s say they would welcome help from their lender

26% of first time home buyers used a gift as part of their down payment

Bottomline? Mortgage lenders and Congressional Leaders need to communicate the fact that Millennial first time home buyers are going to need some unique help in buying homes and moving the Economy forward. The numbers are too big, and the risk of getting this “wrong” is too great. I hear comments like this every day:

“My fiance and I want to be pre-approved for a mortgage and recently had an offer accepted on a house. We’re signing the P&S this week. I have 100,000 in student loan debt, but only pay $280/month because I am a teacher in a low-income area and I’m on an income based repayment plan. My payment shows up on my credit report as $280 and has been roughly that amount for the past four years as I’ve been working in the same district and my salary hasn’t changed significantly.”

Nichole, we did address the Freddie Mac program with this post about “Buying a House with Student Loans.” As a side note, we are closing a loan for a borrower who does research at a local University next month. The loan is approved – we are just chasing conditions. The borrower has $178,000 in student loan debt, and her IBR payments are $364 a month. We have her locked in as a Freddie Mac loan, and she’s only putting 5% down. It does work.

There are currently no exceptions that can be made for these folks. We have to count 1% of the balance on their $100,000 of student loans, if they don’t have 5% to put down on a house. Doesn’t really make sense…

If you have questions about first time home buyers, student loans and buying a house, please call Steve and Eleanor Thorne at 919 649 5058. We have been able to help folks buy their dream home!

About Eleanor Thorne

I see myself differently than most loan officers in the Cary/Raleigh market. As a rare Cary native, I see myself as an expert on the area, on mortgage industry changes & factors that effect rates! I’ve lived in Cary since 1968 – and I’m second generation “mortgage.” I work with my husband, Steve Thorne Mortgage Loan Originator #60596 Equal Housing Lender